All Forum Posts by: Linden Hausmann

@Linden Hausmann How many deals have you analyzed?

 How about moving over to AZ and doing this right? I did, and only wish I 'd done it sooner....

It's funny because I made a very similar post when I first started, "Can't get SFH to cashflow". Ended up buying a duplex (off the MLS that needed a rehab) and it worked out well. I DID do a lot of DIY stuff on it, so I paid a little more to make sure I got it and got started. For reference it pulls 1350/mo ($675) per unit and the PITI is $616. I've done a couple houses since then, and they both needed significant rehabs. Also I ended up paying 12k over ask to get it - I was ok with this since I thought it was priced low initially, the location is awesome and I could still rehab and come in where I needed to be. My fourplex I bought off market for $160k - I did the 25% down and there went 40k. Realized putting 20-25% down can slow your velocity of money quite a bit. Great property though, since they sold for 190-225k (value of buying undervalued properties). Next 2 houses needed rehabs, PITI is ~650 and they rent for ~1200.

Remember, this is a numbers game too. If you go off the MLS look for properties that have been there for awhile 40-60 days plus, give them lower offers. You'll get a lot of "no's" and the occasional "yes", then boom, good to go.

Also, not sure where you live, but starting locally is not a bad move (assuming your market can support rentals that cashflow). Long distance, rehabs, starting out etc is difficult. You have quite a few chips stacked against you before you even start. I'm not trying to discourage, I just want to be realistic. I think success has a lot do do with making things easier on yourself. 

Couple things - so you're an out of state investor, and you have picked Boise to buy in. Why?

I would recommend running vacancy at 10%, prop management 10%, cap ex 10% (can depend on the age/condition of the property), repairs/maintenance 10%. Why those percentages? Easy, fairly accurate, and generally conservative. There is a need to be conservative (always) but especially in today's market. Your interest rate estimate is also very low, I'd expect 7-7.5% on an investment property for a 30yr fixed conventional, unless you do an ARM, which I would not recommend for a new investor.

A SFH is generally going to need some sort of rehab to cash flow positive and have a great ROI. You have to be able to add value into the house. 98% of houses on the MLS will not cashflow (you're on your way to figuring this out).

I would expect an ROI of a MINIMUM of 8-10% in a B area, 15% in a C area, that's after ALL expenses/budgeting are paid.

That said MFH generally cash flow more than a SFH as well.

I could swear Boise was one of the more overvalued markets, so I would be especially careful not to pay too high of a price. You will likely see further drops in the next 6months to a year. 

Another thing - you don't want to leave a ton of money in the house. You'll be out of capital soon putting 20% down on every investment property. I would say this is ok for the first one, second one, but by the 3rd one you need to be buying undervalued properties if you want your money to go farther. 

Screen by using the 1% rule - not perfect but it's still good. Also, rent should basically be double your PITI for the place to cashflow. By your example, putting 50k down, I'd expect to make 10k after PITI, and 5K after all expenses/budgeting is accounted for. That's my personal guidelines for just looking at a property. Generally I want it to do better than that, but those metrics give decent estimates of what you can expect.

@Linden Hausmann the second property that @Greg Scott listed is in a 55 and over community. and the first in Marsing might be hard to get 1900. However you can find deals that cashflow for less than 40% in Boise. Finding good lenders that have products that help you in early years also really helps. Are you looking at LTR or open to a house hack? 

Linden, in Boise, I am not surprised you are not finding a deal that pencils out. Are you looking for a property that you would want to buy as an investment? What is your current living situation? Do you rent, do you own?